by Peter Koenig
The world is still hell-bent for hydrocarbon-based energy. Russia is the world’s largest producer of energy. Russia has recently announced that in the future she will no longer trade energy in US dollars, but in rubles and currencies of the trading partners. In fact, this rule will apply to all trading. Russia and China are detaching their economies from that of the West. To confirm this decision, in July 2014 Russia’s Gazprom concluded a 400 billion gas deal with China, and in November this year they signed an additional slightly smaller contract – all to be nominated in rubles and yuan.
The remaining BRICS – Brazil, India and South Africa – plus the members of the Shanghai Cooperation Organization (SCO) – China, Russia, Kazakhstan, Tajikistan, Kirgizstan, Uzbekistan and considered for membership since September 2014 are also India, Pakistan, Afghanistan, Iran and Mongolia, with Turkey also waiting in the wings – will also trade in their local currencies, detached from the dollar-based western casino scheme. A host of other nations increasingly weary of the decay of the western financial system which they are locked into are just waiting for a new monetary scheme to emerge. So far their governments may have been afraid of the emperor’s wrath – but gradually they are seeing the light. They are sensing the sham and weakness behind Obama’s boisterous noise. They don’t want to be sucked into the black hole, when the casino goes down the drain.
To punish Russia for Ukraine, Obama is about to sign into law major new sanctions against Russia, following Congress’s unanimous passing of a recent motion to this effect. – That is what the MSM would like you to believe. It is amazing that ten months after the Washington instigated Maidan slaughter and coup where a Washington selected Nazi Government was put in place, the MSM still lies high about the origins of this government and the massacres it is committing in the eastern Ukraine Donbass area.
Congress’s unanimity – what Congress and what unanimity? – Out of 425 lawmakers, only 3 were present for the vote http://www.informationclearinghouse.info/article40489.htm. The others may have already taken off for their year-end recess, or simply were ‘ashamed’ or rather afraid to object to the bill. As a matter of fact, of the three who were present to vote, two at first objected. Only after a bit of arm-twisting and what not, they were willing to say yes. This is how the ‘unanimous’ vote came to be, as trumpeted by the MSM – unanimous by three votes! The public at large is duped again into believing what is not.
What new sanctions does this repeatedly propagated bill entail? – It addresses mostly Russian energy companies and defense industry with regard to sales to Syria, as well more anti-Russia propaganda and ‘democratization’ programs in Ukraine – and Russia; all countries with the objective for regime change.
How do these sanctions affect Russia, especially since all Russian energy sales are no longer dollar denominated? – Sheer propaganda. The naked emperor once more is calling an unsubstantiated bluff. To show his western stooges who is in power. It’s an ever weaker showoff.
Now – as a consequence of declining oil prices and of western ‘sanctions’ – of course, what else? – Russia’s economy is suffering and the ruble is in free fall. Since the beginning of the year it lost about 60%; last week alone 20%. As a result and after serious consideration, says MSM, the Russian Central Bank decided a few days ago to increase the interest of reference from 10.5% to 17% to make the ruble more attractive for foreign investors. It worked only for a few hours. Raising the interbank interest was Putin’s reply to Obama’s bluff – feeding at the same time western illusion about Russia’s decline.
The propaganda drums tell you Russia is helpless because the world has lost the last bit of confidence in President Putin – of course. Regime change is on the agenda. Mr. Putin must be blamed as the culprit, hoping to discredit him with his people. He is leading Russia into a deep recession; the worst since the collapse of the Soviet Union. The mainstream media show you interviews with average mainstreet Russians saying they have lost all their savings, their salaries and pensions are worth nothing anymore and they don’t know how to survive this coming calamity.
In reality, at least 80% of the Russian population stands solidly behind Vladimir Putin. He has brought them universal education, health care and fixed infrastructure that was decaying after the fall of the Soviet Union. President Putin is literally revered as a hero by the vast majority of Russians – including the country’s oligarchy.
In fact, nobody in the western economic system these days is dealing in rubles. In short-sighted connivance with Washington, the treasuries of the western vassals are releasing their ruble reserves – which Russia does not buy, thereby flooding the market. Russia not only has large dollar reserves, plus the ruble is backed by gold, a fact consistently omitted in the MSM. For now, Russia prefers to let the ruble plummet.
Under another ‘arrangement’ by bully Obama, Middle Eastern oil producing puppets like Saudi Arabia and the Gulf States are overproducing and flooding the market with petrol and gas, thereby driving the price down to the ostensible detriment of Russia and Venezuela, both countries where Washington vies for regime change. A double whammy thinks Washington, buying kudos with the stooges. The sheiks that control their energy output apparently have been promised enough goodies from Washington to bite the bullet and take their own losses.
Russia needs rubles. That’s her currency. That is the currency Russia needs for future trading – detached from the western monetary system.
When Russia deems that her currency has reached rock-bottom, she will buy back cheap rubles in the market with massive amounts of dollars. Russia may then flood the western market – with dollars, and by now we know what that does to a currency – and simultaneously buy back rubles from the West. A brilliant move to reestablish Russia’s currency in a new emerging monetary system – which Europe would be welcome to join, but willingly, no by Washington style arm-twisting.
Is this another precursor to war? A nuclear confrontation or Cold War II? – Precursor to a false flag attempting Moscow to fall into the trap? – Not necessarily. Russia is playing a clever chess game, diplomacy at its best. Instead of sabre rattling – Russia is coin rattling. It might lead to a western financial fiasco early in 2015 for the dollar and euro denominated economies. And the winner is…?
Peter Koenig is an economist and geopolitical analyst. He is also a former World Bank staff and worked extensively around the world in the fields of environment and water resources. He writes regularly for Global Research, ICH, RT, the Voice of Russia, now Ria Novosti, The Vineyard of The Saker Blog, and other internet sites. He is the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed – fiction based on facts and on 30 years of World Bank experience around the globe.
Yes, Russia bad. Very bad! Very weak too.
Don’t look at Wealth gap between middle class and rich widest ever otherwise you might get worried, upset and reach for a pitchfork and get your greenbacks back.
Told You
The propaganda keeps coming thick and fast:
http://www.cbssports.com/nfl/eye-on-football/22429359/patriots-owner-robert-kraft-vladimir-putin-stole-my-super-bowl-ring
The propaganda gift that keeps on giving – US-Soviet relations??? KGB??? The Soviet Union was still around in 2005 then, according to the CBS, but took till 2013 to get around to announcing it.
Who knew?
@ Penelope at 23:38 – that Global Research story is accurate in its central points but also pretty over the top in its panic, I thought. Published 2 days ago, so about 3 days old – since then the facts have changed. The parities improved by about Wednesday I think, but I don’t have a link, ZeroHedge has it somewhere – and republished on Russia Insider, of course.
Also today now the Saudi oil minister is saying the oil will go back up soon. That discussion between Gordon T. Long and Charles Hugh Smith, that I believe you were one of the people linking to, points out the serious rebound upward that the oil price will take as the glut turns into a shortage, somewhere inside the next 18-month window. That trillion Dollars of oilfield investment worldwide that started to get deferred in the past week, is still being deferred. This whole episode will be like the pig passing through the snake, spikes in both directions before it’s all equalized.
I don’t know why people think a conspiracy is unlikely on the oil price. The entire oil price is a conspiracy driven at the supply end, that’s how it works. No one has better credibility to my mind than Engdahl with energy and pipeline geo-politics, and he reported the Saudis and US in collusion to drop the price. Admittedly, there’s also a glut because the world is in recession, and no one saw shale coming into the supply volumes. Now shale is being pushed out. I think US oil companies can live with this too, shale is not real energy, it’s driven by quantitative easing supplying a junk derivatives market that is now extremely unstable. So in a way, just another day in the collapsing empire. But also a deliberated move by US and Saudi.
President Putin had some really informative things to say in his conference yesterday. Many of our questions are actually answered by him I think. Odd, to be able to go the to head of a nation to get the best word on what’s happening. He talked at length about Ukraine and Novorossia of course, and about the economy of course. He also talked astonishingly realistically about the 5th Column. The partial translation of his Q&A with journalists yesterday is here:
News conference of Vladimir Putin
I love how he explained the power balance in a democracy between government and corporations. It’s in the section where he talks about Russian companies and their dollar holdings, when he had a “friendly phone conversation” with some of them a couple of days ago.
The Global Research story linked above and also a summary by Alexander Mercouris on his Facebook page a couple of days ago, both have a relation with what Putin is saying here. Maybe I can amplify this in another post, maybe.
[from Blue]
Penelope said…
Grieved, I agree no one wants to crash the dollar. Everybody is holding a LOT of dollars.
…
Not a question of who wants to, but that it’s not sustainable with a lot of power behind it, and even then not indefinitely.
In the long run, if we survive, some communistic system will prevail which doesn’t use money, much as in a well functioning family where personal values, and social values, and relationships are the ‘coin’. Long ways to go until then! It means greater awareness of other humans as part of each of us and the whole, and many stragglers along the way.
Still, we already see a fair bit of that from a significant number of people. Sadly, many, especially in the West, can’t get their consciousness beyond money and power — but it rubs the rest of us the wrong way, and it isn’t ‘natural’. The oligarchy knows that, which is why they know they have to tell so many lies to excuse what they do.
I heard a Chinese professor say that when he was still in China, with communism, when it snowed all the people on the block went out and shoveled the street, and people helped each other all the time. I suspect that much of that thinking is still there, and maybe elsewhere in the East.
This is, I suspect, one reason why peole want to break from the dollar and western fascism — it’s not quite ‘human’.
__Blue
Grieved: But what did you think about the REASON for the ruble-fall set out in the global research article; I was struck by the fact that no one else mentioned it & wondered if it in fact cd have triggered or helped to trigger the fall. I agree that the first part of the article is too panicked. I was interested in the factual part that followed.
http://www.globalresearch.ca/a-full-blown-economic-crisis-has-erupted-in-russia/5420339
Grieved said, “I don’t know why people think a conspiracy is unlikely on the oil price. The entire oil price is a conspiracy driven at the supply end, that’s how it works. No one has better credibility to my mind than Engdahl with energy and pipeline geo-politics, and he reported the Saudis and US in collusion to drop the price.”
It is indeed remarkable that people resist the idea that US & Saudis are manipulating the price because they brag about having done just that in 1986 to bring down the USSR.
Also, in Wm Engdahl’s book ‘Myths, Lies & Oil Wars’ he discloses proofs of how they raised the oil price in 1973. Engdahl has the Bilderberg handbook where they discuss how to spend the petrodollars that result, BEFORE the price raise occurred, how the increased oil price wd come back to them as investments, how it wd bankrupt the developig world, etc. To top it off, the finance minister of the Shah of Iran confirmed that the Saudis were behind the oil price rise at the request of KISSINGER.
@ Penelope at 03:41 – regarding this business with the Russian central bank buying the Rosneft bonds, as reported here: A Full-Blown Economic Crisis Has Erupted in Russia, which is said to have exacerbated the fall in the Ruble.
On Monday or thereabouts, economic minister Ulyukaev announced that
“Russian government members have worked out measures to stabilize the currency market” […] actions “aimed at ensuring greater balance between demand and supply on the domestic foreign currency market…”
Alexander Mercouris on Tuesday asked his Facebook readers for help to understand what this actually meant. Later he made this comment on his own post, that he’d figured it out himself and surmised that it meant the following:
“After some reflection I am going to answer my own question. What I suspect has happened is that the major speculators against the rouble are Russia’s own banks who have a large amount in dollar loans to clear before the end of the year. Instead of paying these debts from their own reserves they have been putting pressure on the government and the Central Bank to help them out by converting roubles into dollars and by speculating against the rouble. It is this more than any other factor that has caused the recent rouble rout. Judging from what Ulyukaev is saying the government and the Central Bank have basically capitulated and have agreed to help the banks out by lending them some of the Central Bank’s reserves. This may explain why yesterday’s rate increase was so ineffective and why over the last few hours the rouble has been strengthening. I stress this is only a guess. Others who know more may correct me and of course it could be that events will do so too.”
This is confusing terrain. I don’t quite follow his bit about speculating against the Ruble, but I do get the part that Russian companies didn’t want to use their own reserves to pay down loans that came due this month in the West – and that they, crucially, cannot refinance because sanctions now deny them access to western sources. So they were lobbying the CBR for help. Ulyukaev was announcing that the help had been agreed to.
Now, President Putin himself has revealed some of the discussions that went on earlier this week in this matter. I was going to quote at length Putin’s own statements about this – and give yourself the treat of reading Putin in his News Conference Q&A – but Alexander Mercouris has made an update post in Facebook, saving me the trouble and I’ll just rip it it right here.
NOTE – It looks like I have to flow to a Part 2 to do it, stay tuned.
@ Penelope. So this is Part 2. The update a few hours ago by Alexander Mercouris on Facebook about the Ruble fall, quoting President Putin:
PUTIN EXPLAINS THE ROUBLE CRASH
Putin’s very interesting press conference (concerning which more later) contained this strikingly interesting paragraph:
“You know, two days ago I had a friendly telephone conversation with some of them and I asked, ‘So why are you holding back?’ By the way, I didn’t make them do anything. ‘Our loan payments are due soon,’ was the reply. Then I say, ‘I see. OK, if you scrape the bottom of the barrel, can you enter the market?’ He took a minute and replied: ‘Well, I guess we have three billion dollars.’ They have three billion in reserves. See what I mean? It is not 30 kopeks. And this is just one company.
“So if each company has three billion, in total it is not 30 but 300 billion. Still, we can’t force them. Even top management of the companies with state participation must anticipate what will happen and ensure the stability of their companies. To this end, the Government must work very closely with them and ensure, along with the Central Bank, foreign currency and ruble liquidity whenever it is necessary.”
I am not going to try and guess who Putin had this telephone conversation with. However what this paragraph basically tells us as I read it is:
1. That Putin was heavily involved in managing the crisis:
2. That the crash was indeed caused because several Russian companies (I am guessing it was mainly the banks) refused to draw on their foreign currency reserves to pay their end of year foreign currency debt payments the total of which we know was in the region of $30 billion. When the Central Bank and the government initially refused to provide assistance the result was a stampede as roubles were frantically converted into dollars causing the rouble to crash.
The reason I think it was most probably the banks is because the crash immediately reversed the moment the government acted to provide them with foreign currency liquidity. Note that this is being done through loans rather than through outright transfers. At some point they will be expected to pay the money back.
That at least is my theory. It is only a theory. If anyone knows better or can pick holes in it or point out how I am wrong I would be interested to hear from them. Given the scenes on Monday and Tuesday I think there is a strong interest in finding out the truth.
So, first the Bank said no and that started the free fall, then it reversed, aided the companies and also raised the rate to 17%. These latter actions, to my mind, are exactly what tells speculators that a central bank is on the scene and there’s no margin for profit, so back off. Putin’s supporting the Bank and also hinting that it could have done a bit better – reprimanding the Bank but also another way of saying that the Bank and the government are aware of all the nuances and are equal to them all, so be warned – is exactly the responsible move to inspire confidence in investors and intimidation in speculators.
That’s my very amateur – very non expert – two cents, convertible on demand.
The usually well-informed Eric Kraus writes:
“As I was saying yesterday, the Russian issuers are in no trouble whatseover – they are taking advantage of irrational markets to massively buy back their own debt at a huge discout.
Date: Thursday, 18 December 2014 17:36
Subject: Russia buy backs over the past few days …”
https://www.facebook.com/pages/Truth-Beauty-and-Russian-Finance/161448950542575
and then a list of huge buy backs.
As I said (but the post obviously didn’t get through, my bad, perhaps I *am* a robot :-), this is not the first time that Russia plays this clever trick and the 2 posts that did get through described the first time in March 2014.
Dear Peter Koenig…thanks for the very hopeful and well founded knowledgeable article.
Your name suits your article and all I can say is, “I hope you’re right, and why shouldn’t you be ?”
Stavros, what does this have to do with Saudi ?
your quote:
“What I disagree with from the claims made in the above article, is this Saudi-US so called secret pact to bring down the oil price. For anyone finding this plausible, I suggest they do some research on the cost of production in Canadian tar sands, and the US shale patch. They might also want to take a peek at the financial position of the firms involved in these expensive projects.”
Anon, about Putin ‘chasing piglets’…that’s funny…thanks for that, I hope someone took a snapshot of dear Putin’s face….
Stavros, the comedy was very creative, but I didn’t like the lady…not sure what part she played by I’m sure Putin will never, never fall for a lady like that.
He’s such a teddy bear.
Bob Kay, convincing argument, but I think there are forces in high places fighting on the battlefield of Earth…higher beings…some very evil higher beings.
And some very good higher beings. The Archangel Michael is the being that is the most loved in Novorussia and Russia…St. George…..
Anon, I’m sorry you feel this way;
‘To me, what is even more amazing is that Putin, while not technically lying, glosses over the massacres committed in the eastern Ukraine Donbass area.’
but as has been pointed out in earlier comments on threads here in the last day or so, Putin asked those guys not to turn it into a militia right away.
I understand how you feel, but Putin is in charge of Russia, not Novo Russian.
Bye for now,
Ann
To T1
‘It’s been said that if I owe the banks $1000 I have a problem. If I owe the bank $1000000 they have a problem.’
T1, get this…I owe the bank $500,000 and I’m a gardener…
I think that the Workers need a Socialist System, where everyone can be self sufficient.
That means that almost everyone is a mechanic and almost everyone is a jack of most trades, even those qualified tradespeople are needed, and in this way People should not ask what their Country can do for them, but what they can do for their Country.
This would require that most of the Products are of the 1930’s to 1950’s improved models of cars, washing machines, fridges, etc etc , and where there are no computer chips, but these products are cheap and sturdy and last a long time, and almost anyone can repair them with the abundant spare parts, and Communal Workshops that are supervised by qualified tradespeople, if the repairs cannot be done at home.
This would include public Housing, and People might say that what are Russians going to do after they have their necessities.
the answer is that there is plenty of voluntary work in the military, because that is they way for a Country to defend itself from Nazis.
I would also include that Russia needs to move to becoming be self sufficient in food, and Gas can heat triple glazed glasshouses or plastic houses, because this will provide work for All the Workers.
The Fundamental issue with Anglo-America and Russia is that of a Country providing work for All of those who are Physically and Psychologically capable of working, and Anglo-America does not want Full Employment in any Country.
@ Penelope – I don’t know if this thread is still alive, but I realize what I wrote about this week’s events isn’t quite a match for the Rosneft story. The two things do seem pretty much part of one large dialog between business and government however. Let’s hope more information comes to surface to show the fuller story.
So we will see finance-Paulus meeting in Stalingrad? I Finland we have a group of unofficial tink-tank watching this fantastic euphoria among western cheerleaders marching to Russian minefield.
I have no idea how badly Russia with its huge resources is once again so underrated by our charming fundamentalists.
Take this advice for informational war, the Saker ,and pass it on to your people:
Get a group of Belorussians, Russians and Ukrainians singing Ukrainian folk songs and post it on the web to show the enemies that their attempts to divide and clash the three peoples are not working. Ukrainians have great folk songs that are heritage not only of Ukraine but of all the Slavic world.
That will be an effective infowar maneuver. Have flags of Belorussia, Russia, Ukraine and Novorossia visible in the video around the folk singers .
Saker, check this out … great article, must read! Recommends many of what you have been advocating. Hopefully Putin has a plan. Barbarossa 2: Ruble Takedown Exposes Cracks in Putin’s Defense, by MIKE WHITNEY, http://www.counterpunch.org/2014/12/19/ruble-takedown-exposes-cracks-in-putins-defense/ .
What’s with George Friedman’s pollyanna bullsh*t? He really thinks the US is acting imperialistically b/c “Obama was embarrassed in Syria by Putin”? Or that the US has a legitimate interest in “preventing the rise of a hegemon”? As if Russia would have a legitimate interest in preventing the US from dominating N. America. Guys is freak and a retard to even think he can say such nonsense to his Russian hosts with a straight face. http://www.stratfor.com/weekly/viewing-russia-inside#axzz3MD8AbNxU
Correction
Anonymous
on 18 December, 2014 19:01
began a post “In 1900,Germany financed construction of the Berlin-Istanbul rail line.”
Thatshould be Turkey-Bahgdad rail line. Berlin already had rail to Turkey.
from Rick,sorry my error.
This is one very interesting interpretation of ongoing events.
Anonymous
re: Anonymous said
at 19 December, 2014 19:16…
So we will see finance-Paulus meeting in Stalingrad? I Finland we have a group of unofficial think-tank watching this fantastic euphoria among western cheerleaders marching to Russian minefield.
I have no idea how badly Russia with its huge resources is once again so underrated by our charming fundamentalists.”
Reply: Well said. I hope and think similarly.
Paul Craig Robert’s ‘black swan’ remedies are easy to apply, (one example)
Inform the world that Russia will not trade energy with any NATO country.. Result = immediate capitulation and grovelling, or alternatively watch their already almost negative-growth financial bases implode, and their GDP’s descend to zilch.
America could try to prop them up and stop a global melt-down for a few months, but the US of A with 18 trillion debt and counting, a Federal Reserve built on lies, no gold to repay anyone, a banking system that pursues fraud for its own interests like there’s no tomorrow, and massive quantitative easing..Result = a financial catastrophe.
Germany France, Italy, UK, Holland etc. all in serious economic decline, and all the countries who slavishly follow the United Snakes diktat marooned in the same rapidly sinking boat. Excellent… Bring it on.!
Dear Saker,
I have searched all over, and I cannot find Putin’s stuff-the-bear Q&A video. Could you reproduce it on your site with English translation? I have read statements from it, and I think it is the greatest thing ever said in the last 1500 years.